HOUSTON, October 30, 2018 (PCW) -- Volatile ethane prices due to a mismatch of timing for petrochemical and midstream expansions will likely lead to near-term feedstock switching for US Gulf Coast crackers, a major ethylene producer said today.

Today, many crackers continue to maximize ethane feed, but we will likely see increased utilization of feedstock flexibility as the industry navigates through this period of volatility, LyondellBasell chief executive Bob Patel said in an earnings call with investors.

Ethane supply tightness is expected to persist through 2019.

LyondellBasell's 3Q North American ethylene production was 80% ethane-based and 13% heavier NGLs-based.

However, the company said its Gulf Coast ethylene plants could use as little as 25% ethane and as much as 65% naphtha, with most of that flexibility contained at the Channelview and Corpus Christi crackers.

We can rebalance NGL feeds within hours, and switch to liquids within days, Patel said.

He noted that the company has almost 2.5 billion pounds of ethylene capacity in the Midwest that is insulated from the fluctuations of Gulf Coast ethane prices.

LyondellBasell is also investing in the capability to crack y-grade, a raw mixture of NGLs from the natural gas stream.

Patel said that switching to heavier feedstocks could improve propylene availability in 2019 (heavier NGLs yield much more byproduct propylene versus ethane), but he didn't expect the propylene market to be consistently well-supplied next year. --
David Barry